STRATEGIC HOTELS AND RESORTS INC CHICAGO, May 4, 2015 /PRNewswire/ -- Strategic Hotels & Resorts, Inc. (NYSE: BEE) today reported results for the first quarter ended March 31, 2015.
($ in millions, except
per share and
operating metrics) First Quarter
-------------
Earnings Metrics 2015 2014 % Change
---------------- ---- ---- --------
Net income attributable
to common shareholders $15.8 $217.2 (92.7)%
Net income per diluted
share $0.04 $0.97 (95.9)%
Comparable funds from
operations (Comparable
FFO) (a) $56.3 $12.2 360.7%
Comparable FFO per
fully diluted share
(a) $0.20 $0.06 233.3%
Comparable EBITDA (a) $74.1 $41.2 80.0%
Same Store United
States Operating
Metrics (b)
-----------------
Average Daily Rate
(ADR) (d) $300.26 $281.02 6.8%
Occupancy 72.1% 68.8% 3.3 pts
Revenue per Available
Room (RevPAR) (d) $216.61 $193.45 12.0%
Total RevPAR (d) $429.33 $386.90 11.0%
EBITDA Margins (d) 25.0% 20.0% 500 bps
Total United States
Operating Metrics (c)
----------------------
Average Daily Rate
(ADR) (d) $313.71 $292.49 7.3%
Occupancy 72.7% 69.5% 3.2 pts
Revenue per Available
Room (RevPAR) (d) $227.97 $203.22 12.2%
Total RevPAR (d) $455.11 $410.47 10.9%
EBITDA Margins (d) 25.0% 20.1% 490 bps
----------------- ---- ---- -------
(a) Please refer to tables provided
later in this press release for a
reconciliation of net income
attributable to common shareholders
to Comparable FFO, Comparable FFO
per share and Comparable EBITDA.
Comparable FFO, Comparable FFO per
share and Comparable EBITDA are
non-GAAP measures and are further
explained within the reconciliation
tables.
(b) Operating statistics reflect results
from the Company's Same Store
United States portfolio (see
portfolio definitions later in this
press release).
(c) Operating statistics reflect results
from the Company's Total United
States portfolio (see portfolio
definitions later in this press
release).
(d) ADR, RevPAR, Total RevPAR and EBITDA
Margin statistics have been
modified to take into account
certain adjustments, including
those related to the adoption of
the Uniform System of Accounts for
the Lodging Industry, Eleventh
Revised Edition (the "USALI
Eleventh Revised Edition").
"We are obviously very pleased with our first quarter results. The combined performance of our newly-acquired assets alongside our legacy hotels drove impressive increases in virtually all relevant metrics compared to the same period last year," said Raymond L. "Rip" Gellein, Chairman and Chief Executive Officer of Strategic Hotels & Resorts. "As we head further into the year, our team is focused on our well defined strategy of strengthening our balance sheet, enhancing the quality of our best in class portfolio and maximizing the performance of our hotels. Given the strength of our first quarter performance in each of these strategic objectives and our positive outlook for the remainder of the year, we are increasing our full year guidance for all key metrics."
First Quarter Highlights
-- Total consolidated revenues were $325.3 million in the first quarter of
2015, a 67.1 percent increase over the prior year period. This increase
was primarily driven by the acquisition of the Four Seasons Resort
Scottsdale at Troon North and the Montage Laguna Beach resort, as well
as the consolidation of both the Hotel del Coronado and Fairmont
Scottsdale Princess hotel.
-- Net income attributable to common shareholders was $15.8 million, or
$0.04 per fully diluted share, in the first quarter of 2015, compared
with $217.2 million, or $0.97 per diluted share, in the first quarter of
2014. First quarter 2014 results include $233.9 million in gains from
the sale of the Four Seasons Punta Mita and the Marriott London
Grosvenor Square hotel, net of taxes, and the consolidation of the
Fairmont Scottsdale Princess hotel. These gains, and other one-time
items, have been excluded from Comparable EBITDA, FFO and FFO per fully
diluted share.
-- Comparable FFO was $0.20 per fully diluted share in the first quarter of
2015 compared with $0.06 per fully diluted share in the prior year
period, a 233.3 percent increase over the prior year period. The
year-over-year increase in Comparable FFO per fully diluted share was
primarily the result of accretive acquisitions and the redemption of
preferred equity.
-- Comparable EBITDA was $74.1 million in the first quarter of 2015
compared with $41.2 million in the prior year period, an 80.0 percent
increase over the prior year period. Approximately $23.6 million of the
year-over-year increase was related to acquisition activity, net of
disposition activity, with the remainder from organic growth within the
portfolio.
-- Same Store United States portfolio RevPAR increased 12.0 percent in the
first quarter of 2015, driven by a 6.8 percent increase in ADR and a 3.3
percentage point increase in occupancy compared to the first quarter of
2014. Total RevPAR increased 11.0 percent between periods, with
non-rooms revenue increasing 10.0 percent between periods.
-- Total United States portfolio RevPAR increased 12.2 percent in the first
quarter of 2015, driven by a 7.3 percent increase in ADR and a 3.2
percentage point increase in occupancy compared to the first quarter of
2014. Total RevPAR increased 10.9 percent between periods, with
non-rooms revenue increasing 9.7 percent between periods.
-- Group occupied room nights in the Total United States portfolio
increased 6.2 percent and transient occupied room nights increased 3.3
percent in the first quarter of 2015 compared to the first quarter of
2014. Group ADR increased 8.5 percent in the first quarter of 2015
compared to the first quarter of 2014, and transient ADR increased 6.1
percent compared to the first quarter of 2014.
-- Same Store United States and Total United States portfolio EBITDA
margins expanded 500 basis points and 490 basis points, respectively, in
the first quarter of 2015 compared to the first quarter of 2014.
Excluding one-time real estate tax credits received in the first quarter
of 2015, EBITDA margins expanded 300 basis points and 310 basis points
in the Same Store and Total United States portfolios, respectively.
EBITDA margins in both years have been adjusted to exclude the
amortization of the below market hotel management agreement related to
the Hotel del Coronado, and other adjustments related to the adoption of
the USALI Eleventh Revised Edition to improve comparability between
years.
Four Seasons Austin Hotel Acquisition
On May 1, 2015, the Company signed an agreement to purchase the 291-room Four Seasons Austin hotel for $197.0 million. The acquisition, which is expected to close in May, remains subject to closing conditions and working capital adjustments. The Company intends to initially fund the acquisition with existing cash balances and borrowings on its currently undrawn revolving credit facility.
Four Seasons Hotels & Resorts will continue to manage the AAA Four Diamond hotel, which features 291 guestrooms, including 28 suites, and sits on 2.3-acres overlooking Lady Bird Lake in the midst of the Central Business District in Austin, Texas. Opened in 1986, the hotel's guestrooms underwent a significant renovation in 2014, and the hotel also features 18,000 square feet of indoor meeting space, two food and beverage outlets, and a 5,500 square foot spa.
The purchase price represents a 12.8 times multiple on forecasted 2015 EBITDA of $15.4 million and a 6.7 percent capitalization rate on forecasted 2015 NOI of $13.2 million. For the Company's period of ownership in 2015, management expects the hotel to contribute $8.5 million of EBITDA to the Company's financial results.
"This is an exciting opportunity to acquire the only true luxury hotel in what is arguably our nation's highest growth market," said Gellein. "As we have long-stated, expanding our geographic diversity is a strategic priority. This acquisition not only achieves that, but adds yet another distinctive, high-performing property to our portfolio. With spectacular views of Lady Bird Lake and easy access to Austin's central business district, convention center, and popular annual events, the Four Seasons Austin is well-positioned under our ownership to deliver the city's most distinctive luxury hotel experience."
Preferred Equity Redemption
On January 5, 2015, the Company completed the redemption of all of the outstanding 3,615,375 shares of its 8.25 percent Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred Shares") at a redemption price of $25.00 per share, plus accrued and unpaid dividends in the amount of $0.028646 per share, for a total redemption cost of $90.5 million. The redemption of the Series B Preferred Shares eliminated approximately $7.5 million of dividend payments on an annual basis.
Transaction Activity
On January 29, 2015, the Company closed on the acquisition of the Montage Laguna Beach resort for $360.0 million. As part of the transaction, the Company issued 7.3 million shares of common stock to an affiliated designee of the seller, priced at $13.61 per share, or an implied valuation of $100.0 million. In addition, the Company assumed a $150.0 million mortgage loan encumbering the property, priced at an annual fixed interest rate of 3.90 percent, which matures in August 2021.
Subsequent Events
-- On April 21, 2015, the Company, along with its joint venture partner,
signed an agreement to sell a 100 percent interest in the Hyatt Regency
La Jolla for $118.0 million, subject to certain closing conditions. The
Company currently owns a 53.5 percent interest in the asset. At
closing, the joint venture will retire $89.2 million of debt secured by
the hotel, which is currently consolidated on the Company's balance
sheet. The transaction is expected to close in the second quarter of
2015.
-- On April 9, 2015, the Company retired the $117.0 million loan that
encumbered the Fairmont Scottsdale Princess hotel. The loan had an
interest rate of LIBOR plus 36 basis points. Upon closing, $15.1
million of cash being held by the lender was released to the Company.
2015 Guidance
Based on the results of the first quarter of 2015 and the current forecast for the remainder of the year, as well as the announced transaction activity year-to-date, management is increasing its guidance ranges for 2015. For the full-year ending December 31, 2015, the Company is providing the guidance ranges shown in the table below. RevPAR, Total RevPAR and EBITDA margin expansion reflect forecasts for the Company's Total United States portfolio.
Guidance Metrics Previous Range Revised Range
---------------- -------------- -------------
RevPAR 5.0% - 7.0% 6.0% - 8.0%
Total RevPAR 4.0% - 6.0% 4.5% - 6.5%
EBITDA Margin expansion 50 - 100 basis points 125 - 175 basis points
Comparable EBITDA $300M - $320M $320M - $340M
Comparable FFO per diluted
share $0.77 - $0.85 $0.85 - $0.93
-------------------------- ------------- -------------
The guidance presented takes
into account various
accounting changes as
stipulated by the industry's
USALI Eleventh Revised
Edition, which became
effective in January 2015.
Guidance for 2015 RevPAR,
Total RevPAR and EBITDA margin
expansion has been presented
to reflect changes compared to
the prior year as if these
2014 statistics included the
USALI Eleventh Revised Edition
changes. Actual RevPAR, Total
RevPAR and EBITDA Margin
changes from prior year may
differ slightly. The Company
will present 2014 RevPAR,
Total RevPAR and EBITDA
margins on an as reported
basis and on a pro forma
basis, which will include the
USALI Eleventh Revised Edition
changes.
Portfolio Definitions
Same Store United States portfolio hotel comparisons for the first quarter of 2015 are derived from the Company's hotel portfolio at March 31, 2015, consisting of 15 properties located in the United States, but excluding the Four Seasons Resort Scottsdale at Troon North and the Montage Laguna Beach resort, which were acquired on December 9, 2014 and January 29, 2015, respectively.
Total United States portfolio hotel comparisons for the first quarter of 2015 are derived from the Company's current hotel portfolio, consisting of all 17 properties located in the United States, including the Four Seasons Resort Scottsdale at Troon North and the Montage Laguna Beach resort, which were acquired on December 9, 2014 and January 29, 2015, respectively.
Total United States portfolio hotel comparisons for the full year 2015 are derived from the Company's current hotel portfolio, consisting of 17 properties located in the United States, including the Four Seasons Resort Scottsdale at Troon North and the Montage Laguna Beach resort, which were acquired on December 9, 2014 and January 29, 2015, respectively, the Four Seasons Austin hotel which is under contract to be acquired in the second quarter of 2015, but excluding the Hyatt Regency La Jolla, which is under contract to be sold in the second quarter of 2015.
Earnings Call
The Company will conduct its first quarter 2015 conference call for investors and other interested parties on Monday, May 4, 2015 at 12:00 p.m. Eastern Time (ET). Interested individuals are invited to listen to the call by dialing 877-930-8296 (toll international: 253-336-8739) with passcode 27338989. To participate on the webcast, log on to http://edge.media-server.com/m/p/5xitwhsx/lan/en 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning at 3:00 p.m. ET on May 4, 2015 through 11:59 p.m. ET on May 11, 2015. To access the replay, dial 855-859-2056 (toll international: 404-537-3406) with passcode 27338989. A replay of the call will also be available on the Internet at www.strategichotels.com or www.reuters.com/finance/markets/earnings for 30 days after the call.
The Company also produces supplemental financial data that includes detailed information regarding its operating results. This supplemental data is considered an integral part of this earnings release. These materials are available on the Strategic Hotels & Resorts' website at www.strategichotels.com.
About the Company
Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) which owns and provides value-enhancing asset management of high-end hotels and resorts in the United States and Europe. The Company currently has ownership interests in 18 properties with an aggregate of 8,325 rooms and 875,000 square feet of meeting space. For a list of current properties and for further information, please visit the Company's website at http://www.strategichotels.com.
This press release contains forward-looking statements about Strategic Hotels & Resorts, Inc. (the "Company"). Except for historical information, the matters discussed in this press release are forward-looking statements subject to certain risks and uncertainties. These forward-looking statements include statements regarding the Company's future financial results, positive trends in the lodging industry and the Company's continued focus on improving profitability. Actual results could differ materially from the Company's projections. Factors that may contribute to these differences include, but are not limited to the following: failure to satisfy closing conditions in transactions, the effects of economic conditions and disruption in financial markets upon business and leisure travel and the hotel markets in which the Company invests; the Company's liquidity and refinancing demands; the Company's ability to obtain, refinance or extend maturing debt; the Company's ability to maintain compliance with covenants contained in its debt facilities; stagnation or deterioration in economic and market conditions, particularly impacting business and leisure travel spending in the markets where the Company's hotels operate and in which the Company invests, including luxury and upper upscale product; general volatility of the capital markets and the market price of the Company's shares of common stock; availability of capital; the Company's ability to dispose of properties in a manner consistent with its investment strategy and liquidity needs; hostilities and security concerns, including future terrorist attacks, or the apprehension of hostilities, in each case that affect travel within or to the United States, Germany or other countries where the Company invests; difficulties in identifying properties to acquire and completing acquisitions; the Company's failure to maintain effective internal control over financial reporting and disclosure controls and procedures; risks related to natural disasters; increases in interest rates and operating costs, including insurance premiums and real property taxes; contagious disease outbreaks; delays and cost-overruns in construction and development; marketing challenges associated with entering new lines of business or pursuing new business strategies; the Company's failure to maintain its status as a REIT; changes in the competitive environment in the Company's industry and the markets where the Company invests; changes in real estate and zoning laws or regulations; legislative or regulatory changes, including changes to laws governing the taxation of REITs; changes in generally accepted accounting principles, policies and guidelines; and litigation, judgments or settlements.
Additional risks are discussed in the Company's filings with the SEC, including those appearing under the heading "Item 1A. Risk Factors" in the Company's most recent Form 10-K and subsequent Form 10-Qs. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. The forward-looking statements are made as of the date of this press release, and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
The following tables reconcile projected 2015 net income attributable to common shareholders to projected Comparable EBITDA, Comparable FFO and Comparable FFO per diluted share ($ in millions, except per share data):
Low Range High Range
--------- ----------
Net Income Attributable to Common
Shareholders $91.6 $111.6
Depreciation and Amortization 159.4 159.4
Interest Expense 89.3 89.3
Income Taxes 8.1 8.1
Non-controlling Interests 0.3 0.3
Adjustments from Consolidated
Affiliates 5.3 5.3
Gain on Sale of Asset (37.0) (37.0)
Amortization of Below Market
Management Agreement 2.1 2.1
Hotel acquisition costs 0.7 0.7
Realized Portion of Deferred Gain on
Sale Leasebacks (0.2) (0.2)
Other Adjustments 0.4 0.4
--- ---
Comparable EBITDA $320.0 $340.0
Low Range High Range
--------- ----------
Net Income Attributable to Common
Shareholders $91.6 $111.6
Depreciation and Amortization 158.8 158.8
Non-controlling Interests 0.3 0.3
Adjustments from Consolidated
Affiliates 10.3 10.3
Gain on Sale of Asset (37.0) (37.0)
Interest Rate Swap OCI Amortization 10.4 10.4
Amortization of Loan Discounts 0.8 0.8
Amortization of Below Market
Management Agreement 2.1 2.1
Hotel acquisition costs 0.7 0.7
Realized Portion of Deferred Gain
on Sale Leasebacks (0.2) (0.2)
Other Adjustments 0.3 0.3
----------------- --- ---
Comparable FFO 238.1 258.1
Comparable FFO per Diluted Share $0.85 $0.93
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Revenues:
Rooms $162,864 $103,100
Food and beverage 123,469 70,017
Other hotel operating revenue 37,907 20,239
Lease revenue 1,031 1,299
----- -----
Total revenues 325,271 194,655
------- -------
Operating Costs and Expenses:
Rooms 47,865 33,707
Food and beverage 83,074 54,603
Other departmental expenses 84,724 53,579
Management fees 11,439 5,778
Other hotel expenses 15,613 15,678
Lease expense 1,034 1,258
Depreciation and amortization 37,664 22,205
Corporate expenses 8,268 7,193
----- -----
Total operating costs and expenses 289,681 194,001
------- -------
Operating income 35,590 654
Interest expense (22,785) (18,274)
Interest income 101 27
Equity in earnings of unconsolidated affiliates - 4,445
Foreign currency exchange (loss) gain (116) 2
Gain on consolidation of affiliates - 78,117
Other (expenses) income, net (157) 423
---- ---
Income before income taxes and discontinued
operations 12,633 65,394
Income tax expense (219) (39)
---- ---
Income from continuing operations 12,414 65,355
Income from discontinued operations, net of tax - 158,435
--- -------
Net Income 12,414 223,790
Net income attributable to the noncontrolling
interests in SHR's operating partnership (37) (849)
Net loss attributable to the noncontrolling
interests in consolidated affiliates 3,434 4,041
----- -----
Net Income Attributable to SHR 15,811 226,982
Preferred shareholder dividends - (9,824)
--- ------
Net Income Attributable to SHR Common Shareholders $15,811 $217,158
======= ========
Basic Income Per Common Share:
Income from continuing operations attributable to
SHR common shareholders $0.06 $0.29
Income from discontinued operations attributable to
SHR common shareholders - 0.76
--- ----
Net income attributable to SHR common shareholders $0.06 $1.05
===== =====
Weighted average shares of common stock outstanding 273,831 206,983
======= =======
Diluted Income Per Common Share:
Income from continuing operations attributable to
SHR common shareholders $0.04 $0.25
Income from discontinued operations attributable to
SHR common shareholders - 0.72
--- ----
Net income attributable to SHR common shareholders $0.04 $0.97
===== =====
Weighted average shares of common stock outstanding 282,792 219,368
======= =======
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31, 2014
2015
----
Assets
Investment in hotel properties, net $3,175,420 $2,828,400
Goodwill 38,128 38,128
Intangible assets, net of accumulated amortization of $9,404
and $7,288 93,874 94,324
Investment in unconsolidated affiliates 22,850 22,850
Cash and cash equivalents 240,156 442,613
Restricted cash and cash equivalents 89,985 81,510
Accounts receivable, net of allowance for doubtful accounts
of $832 and $492 68,141 51,382
Deferred financing costs, net of accumulated amortization of
$8,709 and $7,814 10,559 11,440
Deferred tax assets 1,954 1,729
Prepaid expenses and other assets 49,944 46,781
------ ------
Total assets $3,791,011 $3,619,157
========== ==========
Liabilities, Noncontrolling Interests and Equity
Liabilities:
Mortgages payable, net of discount $1,855,014 $1,705,778
Accounts payable and accrued expenses 251,412 224,505
Preferred stock redemption liability - 90,384
Distributions payable - 104
Deferred tax liabilities 46,137 46,137
------ ------
Total liabilities 2,152,563 2,066,908
Commitments and contingencies
Noncontrolling interests in SHR's operating partnership 9,865 10,500
Equity:
SHR's shareholders' equity:
Common stock ($0.01 par value per share; 350,000,000 shares
of common stock authorized; 275,313,504 and 267,435,799
shares of common stock issued and outstanding) 2,753 2,674
Additional paid-in capital 2,449,084 2,348,284
Accumulated deficit (874,658) (890,469)
Accumulated other comprehensive loss (10,054) (13,032)
------- -------
Total SHR's shareholders' equity 1,567,125 1,447,457
Noncontrolling interests in consolidated affiliates 61,458 94,292
------ ------
Total equity 1,628,583 1,541,749
--------- ---------
Total liabilities, noncontrolling interests and equity $3,791,011 $3,619,157
========== ==========
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Financial Highlights
Supplemental Financial Data
(in thousands, except per share information)
March 31, 2015
--------------
Pro Rata Share Consolidated
-------------- ------------
Capitalization
--------------
Shares of common stock
outstanding 275,314 275,314
Operating partnership units
outstanding 794 794
Restricted stock units
outstanding 1,418 1,418
----- -----
Combined shares and units
outstanding 277,526 277,526
Common stock price at end of
period $12.43 $12.43
------ ------
Common equity capitalization $3,449,648 $3,449,648
Consolidated debt 1,856,036 1,856,036
Pro rata share of consolidated
debt (151,746) -
Cash and cash equivalents (240,156) (240,156)
-------- --------
Total enterprise value $4,913,782 $5,065,528
========== ==========
Net Debt /Total Enterprise
Value 29.8% 31.9%
Common Equity /Total
Enterprise Value 70.2% 68.1%
Strategic Hotels & Resorts, Inc. and
Subsidiaries (SHR)
Discontinued Operations
The results of operations of hotels
sold prior to January 1, 2015 are
classified as discontinued
operations and segregated in the
consolidated statements of
operations for all periods
presented. Subsequent to January 1,
2015, only disposals that represent
a strategic shift that has a major
effect on the Company's results of
operations would qualify as
discontinued operations. The
following hotels were sold during
the nine months ended March 31,
2014:
Hotel Location Date Sold Sales Proceeds Gain on sale
----- -------- --------- -------------- ------------
Four Seasons
Punta Mita
Resort and
La Solana
land parcel Punta Mita, Mexico February 28, 2014 $206,867,000 $63,879,000
Marriott
London
Grosvenor
Square London, England March 31, 2014 $209,407,000 (a) $92,889,000
(a) There was an outstanding balance of
BPS67,301,000 ($112,150,000) on the
mortgage loan secured by the
Marriott London Grosvenor Square
hotel, which was repaid at the time
of closing. The net proceeds we
received were $97,257,000.
The following is a summary of income from discontinued operations for the three months ended March 31, 2014 (in thousands):
Three Months
Ended
March 31, 2014
--------------
Hotel operating revenues $17,767
-------
Operating costs and expenses 11,485
Depreciation and amortization 1,275
Total operating costs and expenses 12,760
------
Operating income 5,007
Interest expense (1,326)
Interest income 2
Loss on early extinguishment of debt (272)
Foreign currency exchange gain 32
Income tax expense (833)
Gain on sale, net of tax 155,825
-------
Income from discontinued operations $158,435
========
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Investments in Unconsolidated Affiliates
(in thousands)
We had a 36.4% equity ownership interest in the Hotel del Coronado that we accounted for using the equity method of accounting until we acquired the remaining 63.6% equity
ownership interest not previously owned by us on June 11, 2014. We had a 50.0% equity ownership interest in the Fairmont Scottsdale Princess hotel that we accounted for using
the equity method of accounting until we acquired the remaining 50.0% equity ownership interest not previously owned by us on March 31, 2014. For purposes of this analysis, the
operating results reflect the 36.4% equity ownership interest we held in the Hotel del Coronado prior to June 11, 2014 and the 50.0% equity ownership interest we held in the
Fairmont Scottsdale Princess hotel prior to March 31, 2014.
Three Months Ended March 31, 2014
---------------------------------
Hotel del Fairmont
Scottsdale Total
Coronado Princess
-------- --------
Total revenues (100%) $34,042 $35,006 $69,048
Property EBITDA (100%) $9,559 $13,191 $22,750
Equity in (losses) earnings of unconsolidated
affiliates (SHR ownership)
Property EBITDA $3,351 $6,595 $9,946
Depreciation and amortization (1,955) (1,551) (3,506)
Interest expense (1,900) (168) (2,068)
Other expenses, net (4) (30) (34)
Income taxes 230 - 230
--- --- ---
Equity in (losses) earnings of
unconsolidated affiliates $(278) $4,846 $4,568
===== ====== ======
EBITDA Contribution:
Equity in (losses) earnings of
unconsolidated affiliates $(278) $4,846 $4,568
Depreciation and amortization 1,955 1,551 3,506
Interest expense 1,900 168 2,068
Income taxes (230) - (230)
---- --- ----
EBITDA Contribution $3,347 $6,565 $9,912
====== ====== ======
FFO Contribution:
Equity in (losses) earnings of
unconsolidated affiliates $(278) $4,846 $4,568
Depreciation and amortization 1,955 1,551 3,506
----- ----- -----
FFO Contribution $1,677 $6,397 $8,074
====== ====== ======
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Leasehold Information
(in thousands)
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Marriott
Hamburg:
Property
EBITDA $1,239 $1,512
Revenue
(a) $1,031 $1,299
Lease
expense (1,034) (1,258)
Less:
Deferred
gain on
sale-
leaseback (44) (53)
--- ---
Adjusted
lease
expense (1,078) (1,311)
Comparable
EBITDA
contribution
from
leasehold $(47) $(12)
==== ====
Security December 31,
Deposit 2014
(b): March 31, 2015
-------------- -------------
Marriott
Hamburg $2,039 $2,299
(a) For the three months ended March
31, 2015 and 2014, Revenue for
the Marriott Hamburg hotel
represents lease revenue.
(b) The security deposit is recorded
in prepaid expenses and other
assets on the consolidated
balance sheets.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Non-GAAP Financial Measures
We present five non-GAAP financial measures that we believe are useful to management and investors as key measures of our operating performance: Funds from Operations (FFO); FFO--Fully Diluted; Comparable FFO; Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA); and Comparable EBITDA.
EBITDA represents net income (or loss) attributable to SHR common shareholders excluding: (i) interest expense, (ii) income taxes, including deferred income tax benefits and expenses applicable to our foreign subsidiaries and income taxes applicable to sale of assets; (iii) depreciation and amortization; and (iv) preferred stock dividends. EBITDA also excludes interest expense, income taxes and depreciation and amortization of our unconsolidated affiliates. EBITDA is presented on a full participation basis, which means we have assumed conversion of all redeemable noncontrolling interests of our operating partnership into our common stock. We believe this treatment of noncontrolling interests provides useful information for management and our investors and appropriately considers our current capital structure. We also present Comparable EBITDA, which eliminates the effect of realizing deferred gains on our sale leasebacks, as well as the effect of gains or losses on sales of assets, early extinguishment of debt, impairment losses, foreign currency exchange gains or losses and certain other charges that are highly variable from year to year. We believe EBITDA and Comparable EBITDA are useful to management and investors in evaluating our operating performance because they provide management and investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe they help management and investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA and Comparable EBITDA as measures in determining the value of acquisitions and dispositions.
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT adopted a definition of FFO in order to promote an industry-wide standard measure of REIT operating performance. NAREIT defines FFO as net income (or loss) (computed in accordance with GAAP) excluding losses or gains from sales of depreciable property, impairment of depreciable real estate, real estate-related depreciation and amortization, and our portion of these items related to unconsolidated affiliates. We also present FFO--Fully Diluted, which is FFO plus income or loss on income attributable to redeemable noncontrolling interests in our operating partnership. We also present Comparable FFO, which is FFO--Fully Diluted excluding the impact of any gains or losses on early extinguishment of debt, impairment losses on non-depreciable assets, foreign currency exchange gains or losses and certain other charges that are highly variable from year to year. We believe that the presentation of FFO, FFO--Fully Diluted and Comparable FFO provides useful information to management and investors regarding our results of operations because they are measures of our ability to fund capital expenditures and expand our business. In addition, FFO is widely used in the real estate industry to measure operating performance without regard to items such as depreciation and amortization. We also present Comparable FFO per diluted share as a non-GAAP measure of our performance. We calculate Comparable FFO per diluted share for a given operating period as our Comparable FFO (as defined above) divided by the weighted average of fully diluted shares outstanding, excluding shares related to the JW Marriott Essex House Hotel put option. Dilutive securities may include shares granted under share-based compensation plans and operating partnership units. No effect is shown for securities that are anti-dilutive.
We caution investors that amounts presented in accordance with our definitions of FFO, FFO--Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP measures in the same manner. FFO, FFO--Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA should not be considered as an alternative measure of our net income (or loss) or operating performance. FFO, FFO--Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that FFO, FFO--Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA can enhance your understanding of our financial condition and results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily a better indicator of any trend as compared to comparable GAAP measures such as net income (or loss) attributable to SHR common shareholders. In addition, you should be aware that adverse economic and market conditions might negatively impact our cash flow. We have provided a quantitative reconciliation of FFO, FFO--Fully Diluted, Comparable FFO, EBITDA, and Comparable EBITDA to the most directly comparable GAAP financial performance measure, which is net income (or loss) attributable to SHR common shareholders.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Income Attributable to SHR Common Shareholders to EBITDA and Comparable EBITDA
(in thousands)
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Net income attributable to SHR
common shareholders $15,811 $217,158
Depreciation and amortization-
continuing operations 37,664 22,205
Depreciation and amortization-
discontinued operations - 1,275
Interest expense-continuing
operations 22,785 18,274
Interest expense-discontinued
operations - 1,326
Income taxes-continuing
operations 219 39
Income taxes-discontinued
operations - 833
Income taxes-sale of assets - 20,451
Noncontrolling interests 37 849
Adjustments from consolidated
affiliates (3,837) (3,675)
Adjustments from unconsolidated
affiliates - 5,290
Preferred shareholder dividends - 9,824
--- -----
EBITDA 72,679 293,849
Realized portion of deferred
gain on sale-leaseback (44) (53)
Gain on consolidation of
affiliates - (78,117)
Gain on sale of assets-
discontinued operations - (176,276)
Loss on early extinguishment of
debt-discontinued operations - 272
Foreign currency exchange loss
(gain)-continuing operations
(a) 116 (2)
Foreign currency exchange gain-
discontinued operations (a) - (32)
Hotel acquisition costs 720 -
Non-cash interest rate
derivative activity 116 -
Amortization of below market
hotel management agreement 513 -
Activist shareholder costs - 1,533
--- -----
Comparable EBITDA $74,100 $41,174
======= =======
(a) Foreign currency exchange gains
or losses applicable to certain
balance sheet items held by
foreign subsidiaries.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Reconciliation of Net Income Attributable to SHR Common Shareholders to
Funds From Operations (FFO), FFO-Fully Diluted and Comparable FFO
(in thousands, except per share data)
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Net income attributable to SHR common
shareholders $15,811 $217,158
Depreciation and amortization-
continuing operations 37,664 22,205
Depreciation and amortization-
discontinued operations - 1,275
Corporate depreciation (128) (123)
Gain on sale of assets, net of tax-
discontinued operations - (155,825)
Gain on consolidation of affiliates - (78,117)
Realized portion of deferred gain on
sale-leaseback (44) (53)
Noncontrolling interests adjustments (110) (98)
Adjustments from consolidated
affiliates (2,243) (1,835)
Adjustments from unconsolidated
affiliates - 3,506
--- -----
FFO 50,950 8,093
Redeemable noncontrolling interests 147 947
--- ---
FFO-Fully Diluted 51,097 9,040
Non-cash interest rate derivative
activity-continuing operations 3,229 (2,294)
Loss on early extinguishment of debt-
discontinued operations - 272
Foreign currency exchange loss
(gain)-continuing operations (a) 116 (2)
Foreign currency exchange gain-
discontinued operations (a) - (32)
Amortization of debt discount 650 -
Amortization of below market hotel
management agreement 513 -
Hotel acquisition costs 720 -
Activist shareholder costs - 1,533
Excess of redemption liability over
carrying amount of redeemed
preferred stock - 3,709
Comparable FFO $56,325 $12,226
======= =======
Comparable FFO per fully diluted
share $0.20 $0.06
===== =====
Weighted average diluted shares (b) 276,930 209,583
======= =======
(a) Foreign currency exchange gains
or losses applicable to certain
balance sheet items held by
foreign subsidiaries.
(b) Excludes shares related to the
JW Marriott Essex House Hotel
put option.
Strategic Hotels & Resorts, Inc. and Subsidiaries (SHR)
Debt Summary
(dollars in thousands)
Debt Interest
Rate Spread (a) Loan Amount Maturity (b)
---- --------- --------- ----------- -----------
Fairmont Scottsdale Princess
(c) 0.54% 36 bp $117,000 April 2015
Westin St. Francis 6.09% Fixed 209,588 June 2017
Fairmont Chicago 6.09% Fixed 93,124 June 2017
Hyatt Regency La Jolla (d) 4.50% /
10.00% 400 bp / Fixed 89,239 December 2017
Hotel del Coronado (e) 3.83% 365 bp 475,000 March 2018
Bank credit facility 2.18% 200 bp - April 2019
Four Seasons Washington, D.C. 2.43% 225 bp 120,000 June 2019
JW Marriott Essex House Hotel 3.13% 295 bp 225,000 January 2020
Loews Santa Monica Beach Hotel 2.73% 255 bp 120,000 May 2021
InterContinental Chicago 5.61% Fixed 142,085 August 2021
Montage Laguna Beach (f) 3.90% Fixed 150,000 August 2021
InterContinental Miami 3.99% Fixed 115,000 September 2024
1,856,036
Unamortized discount (f) (1,022)
------
$1,855,014
==========
(a) Spread over LIBOR (0.18% at
March 31, 2015). See (d) below
for interest on the Hyatt
Regency La Jolla loan.
(b) Includes extension options.
(c) On March 31, 2014, we acquired
the remaining 50.0% equity
interest in the Fairmont
Scottsdale Princess hotel,
resulting in the Fairmont
Scottsdale Princess hotel
becoming wholly-owned by us.
In connection with the
acquisition, we consolidated
the Fairmont Scottsdale
Princess hotel and became fully
obligated under the entire
mortgage loan secured by the
Fairmont Scottsdale Princess
hotel. We recorded the mortgage
loan at its fair value, which
included a debt discount, which
is being amortized as
additional interest expense
over the maturity period of the
loan. In April 2015, we repaid
the outstanding balance of this
loan.
(d) Interest on $72,000,000 is
payable at an annual rate of
LIBOR plus 4.00%, subject to a
0.50% LIBOR floor, and interest
on $17,239,000 is payable at a
fixed rate of 10.00%.
(e) On June 11, 2014, we acquired
the remaining 63.6% equity
interest in the Hotel del
Coronado, resulting in the
Hotel del Coronado becoming
wholly-owned by us. In
connection with the
acquisition, we consolidated
the Hotel del Coronado and
became fully obligated under
the entire outstanding balance
of the mortgage and mezzanine
loans secured by the Hotel del
Coronado.
(f) On January 29, 2015, we closed
on the acquisition of the
Montage Laguna Beach resort. In
connection with the
acquisition, we assumed the
outstanding balance of the
mortgage loan secured by the
Montage Laguna Beach resort. We
recorded the mortgage loan at
its fair value, which included
a debt discount, which is being
amortized as additional
interest expense over the
maturity period of the loan.
Debt Summary (Continued)
(dollars in thousands)
Future scheduled debt principal payments (including extension options) are as
follows:
Years ending December 31, Amount
------------------------- ------
2015 (remainder) $118,439
2016 2,031
2017 394,123
2018 477,299
2019 122,433
Thereafter 741,711
-------
1,856,036
Unamortized discount (1,022)
------
$1,855,014
Percent of fixed rate debt 39.1%
Weighted average interest
rate (g) 3.98%
Weighted average maturity
of fixed rate debt (debt
with maturity of greater
than one year) 4.66
(g) Excludes the amortization of
deferred financing costs.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/strategic-hotels--resorts-reports-first-quarter-2015-results-300076606.html
SOURCE Strategic Hotels & Resorts, Inc.
